A country that works for everyone? House of Lords sets out plan to tackle financial exclusion

3 Apr 2017

A new report from the House of Lords Select Committee on Financial Exclusion has set out extensive recommendations to address the issues of financial exclusion in the UK.

The committee’s recommendations draw on comprehensive evidence submitted by various interested organisations and individuals, including Toynbee Hall. The committee also carried out a visit to Toynbee Hall to meet individuals who had experienced financial exclusion as well as advice and support providers in this field.

Recommendations include:

That the government should appoint a specially designated Minister for Financial Inclusion.

That the remit of the FCA should be expanded to include a statutory duty to promote financial inclusion as a key objective, and that the regulator should set out requirements that banks hold a reasonable duty of care to their customers.

That as part of the ongoing FCA review into high-cost credit, regulations to limit the detriment caused by unarranged overdraft fees should be considered.

That the government work with the Post Office and banks to fund and launch an extensive public information campaign on the banking services available through Post Office branches, and that there is adequate training for Post Office staff, so that they can effectively carry out banking services for customers.

The committee also proposed changes to Universal Credits, recommending that the Government abolish the seven-day waiting period at the start of a Universal Credit claim, that greater flexibility in the frequency of payments should be allowed where monthly payments would contribute to a claimant’s financial exclusion, and that tenants in receipt of UC should be allowed to decide for themselves whether their housing costs should be paid to them or direct to their landlord.

Director of the Financial Health Exchange, Sian Williams, gave evidence to the committee in October, where she emphasised the importance of government leadership and the need for consensus and cooperation in the wider financial inclusion sector.

Asked to give a single recommendation that would maximise the chances of government and other sectors listening and making changes, Sian told the committee,

“I would like you to recommend that the Treasury take a lead, appointing a Minster for financial health, and that that Minister should be able to direct the activities of Treasury, DWP, Cabinet, financial education, health, et cetera, in a combined strategy towards the financial health of the UK.”

With more than 1.7 million people in the UK without a bank account and 40% of the working age population with less than £100 in savings, the cross-party group is committed to addressing the problems of financial exclusion and improving access to mainstream services.

Committee chair Baroness Tyler of Enfield said:

“The UK financial services sector is a world leader which makes it doubly unacceptable that it is failing those who need it most. Too many people still have no bank account or cannot get access to basic or fairly priced financial services. The ‘poverty premium’—where the poor pay more for a range of services from heating their home to accessing credit—contributes to a vicious circle driving people ever deeper into debt and distress.

“The Government have said they want the system to ‘work for everyone’. So do we. We hope they share our view that the current level of financial exclusion is unacceptable. The victims are often the most vulnerable in society – the elderly, the poor or those living with physical disabilities or mental health issues. Action must be taken to ensure the financial system in this country works for all.”